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Abu Dhabi, UAETuesday 25 September 2018

Saudi Arabia's PIF in talks to invest $1bn in Tesla rival Lucid

The fund could obtain majority ownership of US-based Lucid Motors, sources say

Emirates will soon fly to Riyadh 28 times a week. AP
Emirates will soon fly to Riyadh 28 times a week. AP

Public Investment Fund, the Saudi Arabian sovereign wealth fund that Tesla chief executive Elon Musk said could help take the electric car maker private, is in talks to invest in Lucid Motors, people familiar with the matter said on Sunday.

The talks between privately-held Lucid Motors, which aspires to rival Tesla, and PIF is in line with the fund's appetite to invest in electric car companies to diversify Saudi Arabia's investment portfolio.

A deal with Lucid would also be within PIF's limited resources, given that, despite its $250 billion in assets, PIF has already made substantial commitments to other technology companies, including a $45bn agreement to invest in a technology fund led by Japan's SoftBank Group.

PIF and Lucid have drawn up a term sheet under which the fund could invest more than $1 billion in the car maker and obtain majority ownership, the sources said.

PIF's first investment in the car maker, however, would be for $500 million, and subsequent cash injections would come in two stages that are contingent on Lucid hitting certain production milestones, one of the sources said to Reuters.

The talks between PIF and Lucid may not result in a deal, the sources said, asking not to be identified.

Saudi sovereign fund and Lucid did not immediately respond to requests for comment.

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Based in Newark, California, Lucid was founded in 2007 as Atieva by Bernard Tse, a former Tesla vice president and board member, and Sam Weng, a former executive at Oracle and Redback Networks. The company received backing from Chinese investors, including Jia Yueting and BAIC. Other venture capital backers have included Venrock, Mitsui & Co, Tsing Capital, Pragma Ventures and Oriza Ventures.

The motor and transmission in the marque's Lucid Air were developed entirely in-house as an integrated system. "The resulting power-train is smaller, more efficient, and more power-dense than competitor offerings, with improved reliability," the manufacturer says. However, in July last year, the Air hit an eye-watering 378kph.

Meanwhile, Tesla's Roadster, due to come to the market in 2020, is said to be able to hit a speed "north of" 400kph, according to Tech Crunch.

Mr Musk shocked investors this month with a tweet that he was considering taking Tesla private at a price of $420 a share, or $72bn, and that funding was “secured”, Reuters reported.

He elaborated last week that he believed Saudi Arabia’s PIF, a new shareholder in Tesla, could provide the necessary funding, although sources close to the fund have played down that prospect.

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